Young Aussies might have to pay more attention to their superfund as of April 2020
If you’re under 25 or you have less than $6,000 in your superannuation fund then you might want to hear this. On Thursday 19th September the government passed legislation making super life insurance premiums available on an opt-in basis, rather than an opt-out basis to superfund members who fall into either of these two categories.
What does this mean for you, if you are under 25?
The legislation will take effect in April 2020, after which life insurance premiums will no longer be automatically added to your superfund. This means that if you want to have: term life insurance, total and permanent disability cover or income protection insurance then you will have to opt to have them added to your superfund account.
Of course if you work in a dangerous job, life insurance will still be a requirement, regardless of your age or how much you have in your superfund.
Indeed, if you are under 25 and/or you have less than $6,000 in your superfund, then this new legislation could give you the ability to choose a policy that better suits your individual needs, rather than having a default policy chosen for you.
As Mozo banking expert Peter Marshall said, “the new legislation means that, if a young person does still want life insurance, they can take it out themselves and get exactly what they want.”
RELATED ARTICLE: Mozo unveils Australia’s best income protection policies for 2019
Often super funds can have a lot of fine print, and when your employer assigns you a fund it’s all too easy to pay no attention to what premiums you’re paying. An opt-in policy allows you to review what your super provider is charging you for.
The basics of life insurance
So if you don’t know a lot about life insurance, here are the basics. There are three different types:
- Term life insurance. This is what you probably think of when you hear “life insurance”. You might consider term life insurance if you have loved ones who rely on your income to cover expenses. If you’re worried about how your family would deal with the costs of living should anything happen to you, then you might want to invest in one of these policies.
- Total and permanent disability cover. This type of insurance covers you if you are totally and permanently disabled to the point where you can’t work in your usual occupation, or in any occupation, depending on your policy. You might want to consider total and permanent disability cover if your job is more physical or has an element of risk to it. Just keep in mind TPD cover is often included with term life insurance, so don’t double up!
- Income protection cover. Basically this type of life insurance cover is designed to replace any income you might lose if you are unable to work for a certain period of time. It can also help to cover regular monthly bills, like your home loan repayments or utilities if you wind up with a serious illness and can’t return to work.
For more information, why not check out Mozo’s guide on why or why not life insurance might be a good idea for you or have a read about the life insurance policies that won a 2019 Mozo Experts Choice Award.
You can even head to this page if you want to learn more about income protection insurance or take a look at the deals below if you’re thinking about taking out a policy.